Loans - TSP
Loans
General Purpose and
Primary Residence
Table of Contents
Things to Consider Before You Borrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Rules for Borrowing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Applying for a Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Application Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Minimum and Maximum Loan Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Where Your Loan Comes From and is Repaid To . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Nonpay Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Spouses¡¯ Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Court Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Payment Methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Receiving Your Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Repaying a Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Loan Delinquency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Separated Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Loan Rules for Separated Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Appendix I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
How Nonpay Status Affects Your Existing TSP Loan . . . . . . . . . . . . . . . . . . . . . . 13
How to Start and Stop Nonpay Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Resuming Payments From Payroll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Appendix II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Requirements for Primary Residence Loan Documentation . . . . . . . . . . . . . . 17
ThriftLine Service Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Things to Consider Before You Borrow
The Thrift Savings Plan was designed to provide you with income after you
retire. The amount you will have in your account at retirement depends on the
decisions you make¡ªhow much you contribute, how you invest, and whether you
take money out of your account?¡ªbefore you retire.
The TSP loan program is an important benefit that gives you access to the
money in your account. However, taking a loan could result in less money
for you at retirement. So, before you borrow from your account, consider the
following:
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?
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If your TSP investments earn higher rates of return than the interest rate
on the loan, your TSP account will end up being smaller than it would
have been if you had not borrowed from it.
If you are not able to contribute as much to the TSP because of the
financial burden of your loan payments, your TSP account will not grow
as quickly. If you are a Federal Employees Retirement System (FERS)
employee or a uniformed services member covered by the Blended
Retirement System (BRS) and you have to reduce your contribution rate
to below 5%, you will not receive the full agency/service match.
A TSP primary residence loan is not a mortgage. Therefore, the TSP loan
interest payments are not tax deductible, as they might be for a mortgage
or home equity loan.
Before you take a TSP loan, read this booklet in its entirety to make sure you
realize the potential effect a loan has on your retirement income.
Rules for Borrowing
Eligibility
You can borrow from your account if all of the following are true:
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You have at least $1,000 of your own contributions and associated
earnings in your account, not including any money you have invested in
the TSP¡¯s mutual fund window. (To borrow money invested in the mutual
fund window, you must first transfer it into a TSP fund. Agency/service
contributions and earnings on that money cannot be borrowed.)
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